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tv   Bloomberg Markets Americas  Bloomberg  February 28, 2017 12:00pm-3:31pm EST

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from bloomberg world headquarters in new york, we're going to take you from washington, d.c. to mexico city and los angeles in this hour. hero the top stories from bloomberg and around the world that we are watching. u.s. stocks are taking a breather as investors await details of specific policy plans from president trump's first speech to congress. among the biggest losers today after the retailer says sales and margins will be affected by price cuts. in politics, president trump is under increasing pressure to deliver clarity on promises to bring changes to health care. , the tech system, and immigration. leave a look ahead at his address -- we will look ahead at his address to congress tonight. jpmorgan raises its forecast for its return on equity in its investment bank next a higher net interest income and lower
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legal costs. the bank releasing the new forecast as part of its annual and yesterday. dimon is set for a q&a with her this afternoon. update get a live later at the event. julie hyman is here with lots of breaking news. we get to the lackl get to of breaking news on that front. the dow down at the moment seven points. all the major averages in the red as investors are certainly waiting for more detail from president trump tax plan among others. the dow falling from yesterday 's record. let's talk signet jewelers. the shares are halted after they fell to their biggest one-day decline in two months after "the washington post" reported that 250 women and men at its sterling jewelers business made allegations of sexual harassment
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and gender discrimination instances from the late 1990's and 2000. 's. the company halted shares news pending and came out with a statement in part, saying that none of the folks in the broader class-action case of 69,000 folks had brought claims for sexual harassment or sexual impropriety. it had more to do with claims of this termination regarding gender-based pay. all of this is sort of swirling around the company. we will let you know when the shares opened back up, but that was the response from the company at this point. it is addressing this saying it has been in the past and had to do more with allegations of gender discrimination versus sexual-harassment. we will continue to update you on the story. we are seeing a big drag on stocks today from other retailers. target following after the company fell below estimates. ins changing its strategies
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instances, cutting prices. dollar tree, dollar general, and big lots down. as we look ahead to the president's remarks, it is useful to notice on the bloomberg story today that the leadership in the s&p 500 has changed. if you take a look at what led the s&p postelection through about february 8, it was the cyclical groups. those are the top performing groups. on optimismeaning over the new administration's policies over the pace of the economy. if you look at what has happened since then, it is the defense of groups that have now begun to leak -- utilities, health care, real estate could the fact that utilities is at the very top according to the investors quoted in her story might show some sort of underlying unease or lack of confidence in the continuing rally, lackluster though it has been that we have
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seen in the stock market. something to continue to watch in the wake of the president's remarks. vonnie: lots to watch. we will be playing the president's speech tonight at 9:00 p.m. eastern. house speaker paul ryan has won over an unlikely ally perhaps to salvage his controversial tax plan. that ally is steve bannon, trumps top strategist that once described ryan as "the enemy." what this alliance could mean for the future of the bluebird adjustment plan, we will go to th capitol hill. how surprising is this that paul ryan is making an alliance with somebody he doesn't like? >> it is surprising because paul ryan and steve bannon have not been the best of friends. ran the website breitbart news, which has been fiercely critical of speaker ryan and other republicans seen as numbers of the establishment.
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this is a very important get for speaker ryan as he tries to get the border adjustment tax as .art of a overall package it is important to bite down the corporate tax cuts that he wants. steve bannon is a powerful advisor. he has president trump's ear. if you can convince trump to get on board and give a ringing endorsement, this could help on capitol hill were a number of people have been skittish on it and repugnance of come out against it -- republicans have come out against it. vonnie: steve bannon is the closest in range to the president's ear. sahil: they are all important. many bannon is one of influential voices and some have called him the most influential. there is a bit of a divide, my
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colleagues are reported, within the white house as to the border adjustment tax. there are people from the nationalist front with a political background like bannon and stephen miller, who are more favorable to this, who like the idea of made in america products and boosting u.s. manufacturing and making it more competitive abroad, but there are more from a business background like steve mnuchin and gary cohn, who are not yet full on this border adjustment tax. trump has been vague on this. he has sounded some notes about boosting u.s. manufacturing, but he has not given clear guidance on where he stands. vonnie: what is paul ryan's goal? he wants his name on a tax reform plan. will he succeed? sahil: his ultimate goal is a radical overhaul of the tax code done in a neutral way to bypass a filibuster in the senate. and wants to several five the tax bracket.
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he wants the corporate tax rate of 20%. he wants to get rid of most if not all of the loopholes in the tax code. it's going to be very, very givenult to get through the scope of this and given the fact that there are going to be winners and losers of any tax reform package like this. a lot of the losers are already making hay out of this and lobbying members of congress to oppose some of the provisions in it and they are having success. vonnie: in the last 40 plus days, what are you anticipating tonight? was the first thing you are listening for? sahil: the first thing people are looking for is what president trump says on health care. he has not said what sort of provisions or policies he would like to see in an obamacare replacement. he said on two occasions that this is very complicated stuff and he seems to be taken aback by how difficult the process of repealing and replacing obamacare is. republican leaders are having
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trouble getting the right point on board with provisions they want to replace the aca with. number one priority that they have been talking about for six or seven years . anything present trump says will be listen to very closely. vonnie: be sure to catch bloomberg's coverage of president trump's address to a joint session of congress tonight. it stars at 9:00 p.m. new york time with david gura. let's check with the bloomberg first word news. mark crumpton and his own newsroom. -- is in our newsroom. does notl ryan says it concern him that president trump does not offer more detailed plans to for fill his campaign promises because "i see him as more of a chairman." ryan made the remarks on nbc's "the today show" this morning. he also said we need more answers when it comes to russia. >> we think we need to do an investigation here with our intelligence committees. there's one thing that is unique
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about this, which is this gets into the methods of collection of intelligence. these sources and methods are very sensitive. it's the most sensitive tool international security toolbox. that's why we have a committee of men and women in congress who have gone through the process of understanding those tools. "makeryan says we need to sure nothing happens that shouldn't happen." attorney general jeff sessions is warning that the u.s. is facing a new dangerous trend in crime. he says it requires more support for law enforcement and tough measures against criminals. sessions maintains crime rates are moving up and of the acknowledges they remain near historic lows across much of the country. in europe, the british brexit minister urged his cabinet colleagues to prepare for the possibility that there will be no divorce deal with the european union. david davis called that an unlikely possibility, but he says that it's important that
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government departments understand the challenges of negotiating an exit from the eu. malaysia plans to charge to women with murder in the death of the half-brother of north korean dictator kim jong in. one woman is from vietnam and the other is from indonesia. they could face the death penalty if convicted. kim was poisoned by a powerful nerve agent that malaysia says was provided by north korea. dayal news 24 hours a powered by more than 2600 journalists and analysts in over 120 countries, i mark crumpton. this is bloomberg. vonnie: coming up, i will be speaking with carl i set of western assets management. how he is finding returns with fiscal stimulus on the horizon. this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i am vonnie quinn. fed watchers after yields were sent higher and fed officials will all speak before president trump addresses congress. not to mention that we have this vice chair speaking friday. manages the $17 billion western asset core bond funds. we were talking about what you are looking at as a barometer for treasuries and where bonds and yields are going around the world generally. the u.s. german tenure spreads is one of those indicators you are looking at. tell us why. carl: and an environment where
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u.s. rates seem to be heading higher and the fed is in play, we have to keep a close eye on the fact that the rest of the world was the -- would view the u.s. market as a veritable bargain. we have german rates just above that in most of the core of europe about that. i think our rates will stay lower for longer. vonnie: if you want to step into my bloomberg, you can see how that has risen. it has been higher in the past ,bviously throughout the crisis particular the after the fed rose rates by 25 basis points. where else are you looking than as a barometer for political risk around the world? carl: one thing we have learned is that most investors for that matter did not have a competitive advantage one way or the other to predict the direction of elections are populism. we have learned that pretty solidly with both brexit and the trump election. what we have come up with his
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looking atance and what sectors might do better in an environment of an unexpected result. in the case of a trump election, i thought buying financial bonds was an easy one. a clinton administration, things were overregulated and i don't know what else you could do with them. under a trump administration, you can look at the regulated -- de-regulating them. vonnie: is it because they could provide a return under a de- regulatory administration? believe and western asset believes we are moving into an environment where it is individual stockpicking. there are winners and losers in each particular group. in the case of banks, there are
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some that we think will benefit more fr. vonnie: such as? carl: wells fargo. we took our medicine upfront in the crisis and i think some european banks kicked the can down the road so we definitely favor u.s. financials over the rest of the world. vonnie: it will be cheaper in places like italy and france and germany. but still to entice you? carl: we look at security from two directions. one is your fundamental view of kick the tires and meet the management. second is where is the market trading that security? security trading at a cheap level and the news is bad and it may be too cheap. that type of investing works well in this market. vonnie: where else are you biting in terms of corporate debt? carl: i think emerging markets is very interesting. emerging markets would be the up terribly in 2015. we had bad news out of china. vonnie: a as a whole?
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carl: i think was beaten up very badly. are some countries we like and some we don't like. for example, we like brazil, argentina, and even mexico. vonnie: is that becoming a crowded trade, not so much mexico but brazil and argentina? we had a survey of hedge funds out today saying that yen is a popular strategy for i-17. carl: that is why some of these trays have been -- traits have been frustratingly slow to normalize. the peso is the ninth most liquid currency in the world. it is hard to find somebody other the administration that doesn't like mexico. that is why we think the peso has not rallied more. in the long run, technicals when the battle, fundamentals when the war. vonnie: have you been looking at energy assets in the permian basin in other places? carl: energy is an interesting sector.
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what we try to look for in the business cycle is where each individual industry is. energy just came out of recession. everything in energy company is doing today is to improve the balance sheet. that as a sector we want to be involved in and we have do the bottom-up research to pick the individual copies. -- take the individual companies. vonnie: we have talked about elections in france and the netherlands and so on. carl: i'm not a big fan of cbs. i think it is a loss of hedging quality in single lane cds were you can lose and win for the wrong reasons frankly. because of the cost of capital today which is high, the corporate bond basis is negative, which means if you want to go along corporate credit, you are buying it in a much tighter spread than you would if you actually bought the corporate bond. vonnie: will issuance go down in a trump administration?
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carl: i think so. vonnie: is that a good thing or a bad thing? for injury like you, it might not be. carl: i would say we are not ambivalent to supply, but our strategy is that technicals only when the battle and fundamentals win the war. vonnie: call, thanks for speaking with us. to hear all the fixed income news of the week, be sure to catch our new show, "bloomberg real yield." it airs each friday at noon new york time. there will be analysis on global issues that directly affect that markets. -- debt markets. this program begins this friday and every friday at noon new york time. still ahead, no surprise that the mexican peso crashed after the election of president trump, but few could have predicted it is actually leading gains since the inauguration.
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we will look at why the currency has bounced. this is bloomberg. ♪
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vonnie: this is "bloomberg markets." i am vonnie quinn. from worst to best, the mexican peso since the inauguration of donald trump has rallied 10%, twice as much as the number two currency. for more on the resiliency of the peso, we bring in the cio of latin america for ubs wealth management. we also have carl from western asset management, which has a big position in mexican sovereign bonds. let me start with you. or just being flipped about and taking care of? >> a little bit of both, i think . before the election, the peso was a great barometer of risk
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and fear that people had with the relationship between the u.s. and mexico after president trump became president. it was after the elections were some of that fear subsided a little bit. elections, he started to take a little bit more conciliatory a view toward mexico. then it changed again. vonnie: we breached 20 again today. what can mexico take? at what point will they have to intervene again? renato: we believe the mexican peso has a symmetry forecast. we think it can probably appreciate toward 19. if the united states deteriorates -- relationship between united and mexico deteriorates, we can have a push that -- a shock that pushes it
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higher. vonnie: you are not too worried as a vortex comes in. carl: we are not without worries and it has been a very frustrating trade and a very crowded trade. there are couple of things about the u.s.-mexico situation that are not getting as much publicity. one is that they are there second-largest -- they are our second largest trading partner. we forget the tax regimes in both countries are really different. mexico primarily uses consumption tax. the u.s. are merely uses an income tax. when the administration says that mexico is taxing our goods, that is true, but they are also taxing their own goods. i think there is more to this than what we have heard so far. vonnie: what are your investors saying? the administration can say anything it wants. it's what gets passed in congress. renato: are you talking about border adjustment tax? vonnie: changes to nafta
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both. renato: we knew it was coming. both hillary and trump spoke about it during the campaign. now we will see what kind of changes the west wants to make and what kinds of changes does mexico want to see on nafta. vonnie: what do you do as cio of latin america for something like ubs wealth management? do you just not make a trade in this environment until it all settles out? inato: know, we believe, as said before, that the mexican peso could appreciate tour 19. -- toward 19. is important to recognize also that mexico will start in electoral process of its own. process islectoral taking place in mexico next year. in the midst of negotiating nafta and seeing what the u.s. is going to do with the border adjustment tax, mexico will have its own internal political dynamic going on at the same time. vonnie: if they oust the current leadership because of what is
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happening in the u.s. and the tone souring, who is there to replace them in mexico? renato: we have to look it was going on between the mexico and the u.s. in terms of economic growth. we are forecasting that economic growth in mexico to decelerate this year. this is even before talk about border adjustment tax and renegotiation of nafta. mexico's own internal dynamics could lead to a political change. it is still quite early at 18 months away. vonnie: we will check in with you again very soon. the cio of latin america for ubs wealth management and thanks to carl of western asset management. this is bloomberg. ♪
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♪ little hazy day looking out at manhattan. i'm vonnie quinn.
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this is "bloomberg markets." let's start with the headlines from the first word news desk. here is mark crumpton. mark: thank you. president trump says he thinks his predecessor is winding up protesters against his administration. he pointed the finger at barack obama in an interview that aired today on fox and friends. president trump: i think he is behind it. there are people behind it. some of the leaks, possibly, come from that group. they are very serious. they are very bad in terms of national security. i also understand that his politics. in terms of him being behind things, that is politics. it will probably continue. mark: president obama's nonprofit group organizing for action is one of many that supports anti-trump protectors. secretary, wilbur confirmed today.
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he says the administration will work quickly to renegotiate nafta with canada and mexico. he is worth an estimated $2.9 billion and has extensive business ties around the world. in europe british consumer confidence got weaker this month. the appetite for making major purposes -- purchases decreased. a drop in the pound and we can pay growth is starting to -- weakened paper of is starting to drag on british spending. china, a fundamental shift in the communist party's approach to family planning. in 2015, china scrapped the one child policy that has been in place for decades. global news 24 hours a day, powered by more than 2600
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journalists and analysts in more than 120 countries. i am mark crumpton. this is bloomberg. vonnie: thanks. we will check on u.s. stocks briefly. let's look at where the overall averages are standing. the dow jones at session low, 48 points. the s&p 500 down 0.4%. the nasdaq is down 0.7%. we could be coming to the end of a streak of games. you don't know until 4:00 p.m. eastern. let's get to abigail doolittle. abigail: that is true. as for today, one irish influence is target. -- bearish influence is target. worst dayace for its since 2008. a dark time for the stock market. this stock is matching the market from back then. earnings,day down for
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four dollars for share, below consensus. is pursuing a strategy of lower prices. a variety of retailers including walmart, kroger, and dollar tree shares are down today. ocker from target, many not expecting the more bargain oriented stored to follow the path of walmart. as for the walmart strategy, as we look at the bloomberg, walmart has two things. more p and more e. this is price and earnings relative to targets. they are dominating. maybe if they can switch over the target customer base, something our analysts said could work, that could also take time, perhaps the strategy could be successful.
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another problem for target, one thing investors don't think of too much, they have a weak online presence. this is a five-year chart. in orange we have target up and down over the time. going up only 2.5%. they are making investments online. they are playing catch-up. perhaps if they catch up and make a transition toward that walmart strategy, perhaps that will these the pain investors are seeing. vonnie: let's see in the next quarter or two what happens. tonight the president will be addressing congress for the first time. cuts tonnounced budget departments like the epa. that is upsetting some. one such man is the ceo and kind.r daniel lubetzky of
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you are branching out into further different types of snacks. what do you find most objectionable about donald trump's stance? daniel: my concern is not necessarily any particular lessee. i'm not here to objective donald trump. any policy we move forward with should be policies that approach people with dignity and unite our country and help us do critical listening so that both democrats and republicans start finding common ground. vonnie: talk about it as a ceo who has to run a company, gross sales, and a food company that is not the easiest. where are the challenging points for you? daniel: i think clarity of where we are heading would be useful. i don't think anybody knows where we are heading. hasagricultural secretary not been confirmed yet.
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we don't know where we're going. regardless of where policies are at, primarily focused on making sure consumers are informed properly. we just started an initiative called feed the troops where we are donating $25 million to consumers. an independent group of advisors will appoint a board to make sure that nutrition is serving the public rather than special interests. annie: you came into disagreement with the fda on this. years ago the fda told us we cannot use the word healthy on our bars. it did not make sense. you could have healthy on sugary children's food. they called themselves healthy. you cannot have tree nuts or outlook out of call themselves -- or avacado call themselves
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healthy. the fda reversed their stance. they passed temporary guidance. this is going far beyond this. last fall we found out that the sugar association for 60 years have been deflecting attention from sugar to point the finger at fat to skew regulation. we need to make sure we give voices to doctors and scientists and nutritionists. how many employees do you have now? daniel: about 600. vonnie: if corporate taxes were reduced, would you hire more? would you invest capital? daniel: i am a peculiar person. no matter what i will try to invest in our growth. overall, i think our tax structure for operations with double taxation relative to
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other countries is putting america at a disadvantage. vonnie: you would like your taxes, but that would not necessarily spur you? daniel: i am going to invest in our country and our team based on what the market tells us. what about the border adjustment tax? do you make everything and source everything in the u.s.? daniel: 100% of what we make is in the u.s. our raw materials come the united states. although it would probably impact this positively, some of our largest competitors may be importing and manufacturing abroad, overall for the economy i don't think it is going to help the consumer. vonnie: would you have to raise prices in any way if there was going to be one brought in? daniel: they would react to
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whatever the market does. we buy almonds based on the price. depending on what other locations happen, we would react. way this would take away your market advantage. daniel: to our company it would benefit us. to the overall economy, a lot of theywe make in america, use components from mexico, if you tax those, it will make us less competitive. taxnk the border adjustment is not in general the wisest. i'm not a policy maker. increasere is a way to the upside and lower the downside. generally i am a free market er. vonnie: is there an exit in the works at any point? daniel: you want to double down.
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we are one of the only companies that has a -- achieved sizable presence in the market. -- number one in ingredient is nutritionally rich. when my take on new investors, but we will take on the long run. vonnie: thank you for joining us. novell laureates and new york times columnist paul krugman joins us tomorrow. that is on what did you miss? secretary --ith that chair janet yellen. hitof the biggest ipos to in years, snap. this is bloomberg. ♪
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♪ this is "bloomberg markets." i am vonnie quinn. it is time for our latest business flash, a look at the biggest stories in the news right now. a 64% stake in the plastics iner following its spinoff 2015. tom myers orders started today after the markets closed in germany. majorityns to remain a holder in the company after the transaction. shares in target are following today that falling today. customers back in stores they are cutting prices. came on the low end of their projections.
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sec chairman as you can i is looking to roll back portions of the obama policy that had stricter requirements for broadband companies. marketplace is extremely competitive. after the fcc stopped its investigation of free data offering, everything one of the wireless carriers offered data plans. that is good for consumers. vonnie: wireless companies teamed them unfair because they did not fully impact internet companies. he has vowed to dismantle that neutrality. that is your latest bloomberg business flash. willie snap ipo live up to the hype? for wall street that question has already been answered. the answer is no. erik schatzker is here to explain it is all about the
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greens. erik: i think as a rule the more high there is the more -- hype there is the more we should try to look beyond it. this is a way of looking at the ipo that does not look at the comparisons you might make to facebook or twitter directly. facebook is going to come into this conversation. the truth of the matter is that wall street firms, hungry as they are to underwrite these big not makech ipos, do money on these deals. the leverage has ended up accruing to the listing company. it is the listing company that is actually in the driver seat more so than the wall street firms. all of these are among the top managers.
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they are the ones paying the fees. they ultimately set the price. where once upon a time wall street firm could earn a 7% commission for underwriting an ipo, these days it is smaller. in the case of facebook it was barely more than 1%. ,n the case of snapchat, snap it is going to be about three. vonnie: when did this happen? is it the silicon valley companies that were going public that were not making any money? erik: silicon valley has a lot to do with it. valuations were starting to get so high. the amount of money in aggregate is large, but the larger a gets, the smaller commission you can charge. it is 1.1% for facebook. alibaba raised $25 billion. it was only 1.2%. no bank that acted as a lead underwriter or comanager on the alibaba offering walked away with more than $31 million.
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vonnie: not that that is nothing, but it is not a huge amounts of money in banking terms. is this another metric we should look at when deciding whether these valuations are crazy or not? erik: no. this does not really say anything about snap in this case as a company, the viability of their business, the durability of their business model. it is the likelihood or not that it is going to make any money in terms of net profit in the future. what it does say is that even though we are at in what we may call a secular decline for the equity underwriting business, 's is aser for ipo great as ever. every single dollar matters that much more to the wall street firm because the commission, smaller on these deals, are higher than they are for the rest of the equity underwriting business, which involves mainly
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secondary and follow on offerings, which are largely pro forma. that is about calling an investor up and saying to you want more of this? if other major investors want to get in -- erik: meaning the wall street firms. most people know this, but they occasionally forget that when it comes to underwriting, the wall street firm is in the middle. it is on both sides. you are representing the selling company, snap, and the institutional and some cases retail clients who are buying the stocks. in a hotly anticipated ipo like this, there is a lot of pressure. the wall street firm is under pressure to satisfy that demand. everyone wants his or her allegation as it is called. if they don't get it, they are going to be upset. it is a delicate balancing act the wall street term has to walk.
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vonnie: may i say, the whole is responsiblere for this, and it is maybe poetic justice. is there any way one can be certain they will be called for the next portion of this? erik: it is highly competitive. ego and prestige play a large role. there is no question the more you win, the more corporate clients see you as the winner and think you should be among the front runners. the leagueley won management role for this offering. as i mentioned there are three co-leads, or comanagers if you prefer. there is deutsche bank and j.p. morgan. takel likelihood they will a sizable fee, that will be slightly smaller than what
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morgan stanley is going to make on this particular deal. what does morgan stanley have to offer that is different from what goldman sachs has to offer? in this case it is the retail brokerage business. morgan stanley has what they call wealth management, which involves financial advisors called rockers. that is another distribution channel that morgan stanley has that goldman sachs does not. it is not as if goldman sachs does not have wealth management clients. they tend to be richer, and the business is much smaller. they are coveted because they might be perceived from the company's perspective to be longer-term holders than your average retail joe. we don't know what anyone does with the shares. america has bank of offer that a goldman sachs does not. it starts trading on thursday. thank you for that. now some headlines from mary
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barra, speaking at the economic club of washington. far that headlines so she has graded, she says the company is more focused and disciplined than in the past. the auto industry is seeing more change than in the past 50 years. it looks like they are having some fun there. to understand -- vonnie: that is the economic club of washington and mary barra. 2017,roved view for saying the bank good benefit from president trump's policies. this is bloomberg. ♪
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♪ is "bloomberg markets." i am vonnie quinn.
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j.p. morgan is holding its annual investor day. new york. the bank says it could benefit from president trump's promise to cut corporate taxes. phone iss over the hugh son, at the conference. what have you learned so far? hugh: perhaps a little less of apple the near average jpmorgan yesterday because the numbers have not switched around that much. they are projecting to the present r.o.e. over the medium-term. some modifications here and there. the most important thing is you have the cfo talking about how she is hopeful that the various betterory industries can court make their approach to regulating the banks. event. he is at the
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that was less than 24 hours ago. he is still making bubble comments. have you heard any? he introduced himself as a free agent. you don't see that happen very often. he was let go at 4:00 p.m. yesterday. he is still challenging management about their views across a bunch of different metrics. he is not giving up. vonnie: they're going to conclude the event later on with a question and answer session. we might hear more at that question and answer session. were there any metrics that surprised you? think anrall i interesting area was the amount that credit card cost, i think i saw 600 million or 700 million drop in revenue because the acquisition costs in that area,
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sapphire cost him so much -- then so much. altogether 1.3 billion dragged in revenue. those are the things i would highlight. vonnie: hugh son is there all day. he will be at that investor conference all day in new york. a reminder you can watch president trump's speech live in full later on bloomberg tv. our special coverage begins at 9:00 p.m. in new york with david gray. you can watch all of our interviews on the bloomberg on tv . you will see the great lineup. this is bloomberg. ♪
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david: it is 1:00 in washington, 6:00 in london, 2:00 in hong kong. from new york, i'm david gura. welcome to "bloomberg markets."
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politics and policy in president trump's first 100 days and up to us. president trump addresses a joint session of congress this evening. the administration says it will focus on foreign policy, security, and the budget proposal. todd harris will dig into the defense spending. over the first month of the presidency, key advisors have struggled to explain the president's policies. policy adviser stephen miller could be the exception to that. he is profiled in this week's bloomberg businessweek. and bill cohen will and join us, he has a new book called "why wall street matters." wide changing incentives could be the key to financial reforms. the president's is billing it as his biggest speech yet. donald trump will give a speech
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to a joint session of congress tonight. he says he will highlight his plans to increase defense spending, law enforcement spending, increase infrastructure spending, and cut government programs. let's get to shannon pettypiece. there is so much expectation from wall street and investors that they will get details tonight. what are members of the president stopped saying about how detailed address we are going to get tonight? shannon: there are so many questions and uncertainty. still a lot of things that need to be worked out before we can get the certainty that wall street is hoping for it on the budget, they outlined yesterday this so-called skinny budget, but it was only at a high-level level look at defense, nondiscretionary programs, foreign aid. we still don't know the tax plan, where the president will land on issues like a border adjustment tax, health care, there is supposed to be a plan, we might get more details.
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but again, to the level of granularity that i think wall street is hoping for, members of congress are hoping for, i would minimize expectations. david: you saw the president as a candidate, you have seen him with foreign leaders, speaking alone at a news conference. how about this forum them tonight, how will he speak, how will he affect in this joint session in the house chambers? a traditionale campaign rally, this is a speech that has been written four days. we'll be read off of the teleprompter. whether he will veer from that is subject to watch for. he does insert assigns here and there, even when he has a written, prepared speech. reaction from the room. he is used to speaking in front of a very friendly, favorable crowd. --h democrats of their, there, it will be interesting to see how he relaxed to that. there could be some colorful
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moments that come out of this. david: i imagine some of this will center on the president's budget proposal. we have heard about that from administration officials. anything new today about when we will see a fuller budget? shannon: we will get more details on that tonight. as far as the real nuance, by march, there should be more details but probably a may timeline before that thick stack of papers and all of the department line items are there. that we will not see until probably may. and that a reminder that the president's budget is sort of an opening bid. congress that has to work it all out and will ultimately determine how the federal money is spent. i know we have been making a lot of this initial look we got yesterday but we still have a long way to go before we know what the budget will be. david: shannon pettypiece, thank you so much.
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you can watch the speech live, in full on bloomberg television. coverage begins at 9:00 new york time tonight. let's stick with that white house budget proposal. the administration wants to spending for tanks, weapon systems, and ships. he says that money will come from cutting funding from foreign aid and the epa, among other things. todd harris is with us in washington, joining us. help us understand the headline numbers, the $54 billion number. how much of it in crestwood that be if this was approved by congress? about a 10%d be increase above the current budget cap that are in effect for 2018. it is a sizable increase in the defense budget. there are several notes of caution that go along with that. first of all, the same budget proposal calls for an equal amount of cuts in the nondefense side of the budget. that is likely to be a poison
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pill on congress. it is not likely to make it through the senate, may not even make it through the house. the other unknown factor here is we don't know what the war related budget will be. that could be a sizable amount as well. some of the money from the base budget has migrated into that war budget in previous years. if they try to move some of that back in, that could deduct part of the increase that has been announced. david: help us understand that. we have heard of the overseas contingency operation, this was something that was used throughout the bush and obama administrations. how much is that, and what flexibility does that for the president when it comes to allocating spending to the defense department? to be used fored the cost of operations in iraq, afghanistan, and elsewhere that cannot be anticipated as part of the regular budget process. that funding is not subject to the budget caps under the budget control act. that means it has become a
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loophole, a way for the congress and administration to get around the budget caps. right now, about half of the funding, $30 billion out of $60 billion, is being used to fund things that used to be in the base defense budget. that is interesting because mick mulvaney, the new director of omb in the trump administration, was a staunch opponent of this use of funding to get around the budget caps when he was in congress. so it will be interesting to see, do they continue using this loophole to the stem extent as they have in the past, or do they try to move that spending back into the base budget? david: you have john mccain saying there is not a snowball's chance in arizona that is will get through congress, getting back to what you say about the probability of this getting through. does the size of the expenditure
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match what they see, isn't bigger than what they were hoping for? >> this does not live up to what the republican defense hawks in congress were hoping for. senator mccain came in with a budget of his own in january calling for $640 billion in defense spending. in comparison, what trump has proposed, $603 billion. keep in mind, the obama administration was already planning an increase of its own for fy 18, planning on $584 billion. so trump really came in closer to the obama level -- rather than mccain level. that is why some of the hawks in congress are not satisfied. david: the president will travel to a maybe super carrier later on to give a speech. how will he justify asking for this much money, when you look at the means of justifying an increase of $54 billion, how easy is it to make that case for
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more money? would want your defense budget to be driven by your strategy, what the threats are that you are facing around the world. on whatnt to continue has largely been our defense strategy since the end of the cold war, we want to be the predominant military power in the world, a strategy of global privacy. we want to be forward deployed in all the major regions of the world. be the guarantor of security in europe, the middle east, asia pacific. in that is the defense strategy the president wants to continue, then, yes, the budget justification is justified. you may even need more money than he is requesting, more like what john mccain proposed. on the other hand, if you want to pursue a more isolationist foreign policy, if you want to, as trump has, say our allies need to do more to defend themselves, we don't want to be defending the borders of other
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countries. that actually you probably could make do with a smaller military and smaller military budget than what he has proposed here. one of the things trump has to do is square the circle here, saidus between what he about foreign policy and defense strategy and america's role in the world with what he is calling for in the budget. right now there is a big disconnect. david: todd harrison, thank you so much. now let's get a check on where markets stand. julie hyman in his -- is here with the latest. julie: we continue to see a pullback. it is actually steepening to some extent, particularly with the nasdaq, down .6%. the dow coming off of that 12-session winning streak and a record close yesterday as investors await president trump's comments tonight. if you look beneath the surface, we are still seeing investors bracing for an increase in
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volatility, at least hedging against it. take a look at the bloomberg. vix opens the interest, as well as the total puts and calls open interest. we are seeing both of them climb. in other words, an increase in this hedging activity, and the anticipation that volatility will increase, whatever the triggering event would be. speaking of, a lot in the political realm that has been pushing stocks around and other assets over the past couple of months. today, the latest have to do with corn, specifically ethanol. carl icahn and the leading u.s. by a trade group has presented renewable fuel standards having to do with ethanol. it would give the parties a long-sought change. it appears to be boosting these corn futures 3%.
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david: thank you, julie. coming up, does donald trump's senior policy adviser stephen miller speak for the president, or does the president speak for stephen miller? this is bloomberg. ♪
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david: i'm david gura. this is "bloomberg markets." it seems house speaker paul ryan has made an unlikely ally in his effort to salvage his techs were formed proposal. that is steve bannon. he says that bennett is perhaps
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the most enthusiastic backer of the border adjustment plan, a plan that is facing strong opposition from energy and retail industries. we have a correspondent in washington. how did these two come together, how did they become allies? >> steve bannon has his nationalist priorities. he would like to put into place policies that he says will protect american companies, bring american manufacturing back to the united states. he sees this as a way to accomplish this, the border adjustment plan would put a 20% tax on imports, rather than taxing exports. so it could accomplish the same end justifies by the means that paul ryan came up with. david: what does this say about the relationship between the white house and congress? i know gary cohn and steve mnuchin are not the biggest fans of this border tax. is this likely to lead to more disagreement between the two branches?
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>> speaker ryne is looking for allies wherever he can find them. tax reform is something that is near and dear to his heart, something that he spent a lot of his career working on. he is reaching out to white house advisers and anyone that he can get on board. he is also reaching out to republicans in the house and senate. that is where a big part of the battle will be played out. david: how much is this one issue coming up his plans to advance taxes? [no audio] it would cost a lot, it would be very expensive. they need to have something to offset that. they have come up with a border adjustment plan that seems to be the way to make the least amount of enemies and still get this
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tax reform plan through. david: the chairman of the house and ways committee says that there was a strong likelihood the president would get tax reform on his desk in the first 100 days. are we seeing realism creep through now, is it likely that will happen in the first 100 days? >> probably not and they hope to get it done by the august recess. the hardhat is deadline they set for themselves, the end of the year. they say they are still dealing with obamacare replay or -- repeal and replacement. as long as they can get this done by the end of the year, they would be excited about that. david: anna edgington, thank you. when president trump addresses congress this evening, he will most likely be reading a speech written in part by his policy adviser stephen miller. he is the driving force behind many of the president policies. miller is profiled in the upcoming bloomberg businessweek. how did these two collide?
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how did they find each other in the political space? >> stephen miller is an ambitious guy, went to washington out of college, found his way to jeff sessions, who is now the attorney general. he joined the campaign before iowa. he was a senior policy adviser, speechwriter, a jack of all trades. reallyomebody who has built this sphere of influence around him, steve bannon as well. in terms of these core policy ideas, particularly on some ofion, but also these nationalist principles, that we think donald trump will further elaborate on tonight. david: one thing you get into is his fascinating biography, son of democrats from california, goes to duke university, along the way becomes ardently conservative. how does he find his way in washington? and unusual upbringing, the son of two democrats, became known to conservative radio when
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he was in his teens, in fact. that is part of his rise to such prominence. -- he was able to spot this rising animosity toward immigrants in the country, removal of manufacturing jobs, the issues that so many white-collar -- blue-collar americans are facing today. .hey were able to spot it perhaps the traditional media was not listening to as closely during the campaign. he saw trump in 2014 talking about these issues and he said donald trump gets it. he wanted to jump aboard that team. david: i recall seeing him on the sunday shows, speaking as if you are a lawyer. he did not go to law school but said that he was offering guidance on the immigration restriction. what is he responsible for within the white house? >> he is not a lawyer. one thing that is fascinating, he has always been open and
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vehemently open about defending the policies he feels he has been instrumental in putting forward. with jeff sessions, when he was a senator, first and foremost, rallying against the gang of eight, immigration reform, this bipartisan effort to get through copperheads are restructuring in this country. he feels he was key in dismantling that. trump's refugee order from seven majority countries -- that was an intended strategy. that is one thing this piece goes into. movements.protest they thought it would actually galvanize trump supporters. however, it led to a massive backlash against trump and stephen miller personally for the fact that they had failed to explain it to some of the agencies, who would be implementing the order. donald trump has fundamentally realized politics. it is time the media
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technologies it. bephen miller is a capital believer in donald trump. no light or air between them. i think what we are seeing in the trump white house throughout is the people who really stay in his sunshine, in his right of light, do well in propping him up. he returns that back. after stephen miller gave controversial sunday show appearances, talking about voter fraud in new hampshire, none of which has been proved, he got and i had a boy trump from trump. it seems the most successful people in the administration are doing the same thing. david: my isn't he delivering the daily press briefing, why is he doing the job that he has been in? >> i am sure there are days that sean spicer wishes that he was. -- reallyat he is
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looks to be the mouthpiece. steve bannon is really heard from these days but is certainly the architect of a lot of the core economic nationalism, the core of the immigration strategy , the core of that make america great again. so much of that is make america first again. stephen miller is a part of that. until he suffers some sort of fall, like we have seen from other advisors in not too recent history. that is megan murphy, editor in chief of bloomberg businessweek. check out the story this week. to hear the latest, tune into bloomberg television. starbucks ceo howard schultz says that his company is an open book when it comes to tax transparency. highlights from our interview. this is bloomberg. ♪
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david: this is "bloomberg markets." i'm david gura. schultzs ceo howard spoke to francine lacqua yesterday about a range of topics from the refugee crisis to his leadership and to tax transparency. criticizingithout any particular person or minutes municipality, sometimes a company like starbucks gets pulled into things that the whole story is not really told. we paid 18 million pounds of tax last year in the u.k. is emblematic of our commitment to do things the right way. i personally believe 100% in
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transparency, want to do everything we can to make sure there is trust in everything we do. we are an open book. it impact your customers, the perception of tax refugees, do you do it as a ceo no matter what? >> we want to pay fair and a couple taxes, 100% of the time. never do anything else that would even be remotely inconsistent with being ethical, doing the right thing. with regard to the decision about refugees, things of that nature, i think it's important to embrace your core purpose and your reason for being in all aspects of the business. leadership, being a strong leader, cannot be when it is convenient. it is easy to be a great leader when you have the wind at your back. it is harder when you have the wind in your face. i think leadership is defined many, many times when you have
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to make a tough but just decision. that was howard schultz, ceo of starbucks. up next, bill cohan on why he thinks president trump could be wall street's unlikely savior. that is coming up next. this is bloomberg. ♪
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david: this is "bloomberg markets." i'm david gura. let's start with the headlines on the first word news. mark crumpton has more. trump willdent
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discuss foreign policy, security, and a lot more before a joint session of congress tonight. thee house officials say president is still working on the speech and are not sure how policyc he will be on goals. he is expected to incorporate his recent talks with health care leaders and law enforcement into the address. you can watch the speech live on bloomberg television at 9:00 to new york time posted by david gura. paul ryan says he is not concerned that the president is not offering more detailed plans about how he will fulfill his campaign promises. speaker wright appeared on nbc this morning. chairmanhim more of a that a president, like other presidents have been. he gets people around him who can execute the plans. promising ais also new health care system that would replace all obamacare and the off, by his predecessor,
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john boehner, who said last week that republicans will never agree on such a complicated and divisive issue. the battle over the dakota access pipeline continues today in a federal courtroom. a judge will hear arguments on whether to stop the final phase of construction on the disputed pipeline just days before it could start moving oil. native american tribes in the area argued the pipeline threatens their clean water supply and violates their right to practice religion. is attacking new london rules that require drivers to have basic english skills. the company told a court that 40% of its drivers would fail the regulators english test. ber says passing a written exam has nothing to do with communicating with passengers. regulators are also seeking round-the-clock call centers. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries.
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i'm mark crumpton. this is bloomberg. watching out of washington, president trump expected to sign two house resolutions any moment. one is the inspire act, encouraging women to pursue careers in science, technology, math, and engineering. president isthe also expected to sign the waters of the u.s. executive order. rulesg back post crisis in an attempt to spark growth. in a recent vanity fair article, bill cohan wrote, as painful as it is only to say it, he is right about wall street. bill joins us now. he is the author of a new book "why wall street matters." to's talk about this effort
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scale back, repeal, whatever you want to call it. how central has this been to one donald trump has been talking about in the first few weeks? it was funny thing is not very central to the campaign. he denigrated wall street. that is one of the reasons i wrote the book, to get people's lives right about wall street again. i think it has become more important because he has surrounded himself with these goldman guys who are shaping that policy, putting bugs in his year on a daily basis. ofuspect this general notion too much regulation, regulation coming up the works, sand being thrown into the gears of the wall street engine -- and it is a beautiful engine, and the sandinista be taken out of it -- probably will be mentioned today. david: why has wall street not been better in making the case that you make in the book? why is an wall street making the case why wall street matters? >> it's a good question, part of
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the reason i felt i should write the book. onsomeone who spent 17 years wall street, 13 years writing about it, wall street has not been very good x planning itself. partially because it has its own language. it makes it very difficult for people to understand what is going on. not really that complicated, especially if you have working there and can explain it. i feel like it has sort of fallen to me a little bit to translate what goes on there for the average american. by the way, it is really important what goes on there. leftstreet is the ventricle of capitalism, so you want that beautiful machine to be working well. likes to get things all complicated. it does not need to be. i think there has not been the leadership on wall street that there should have been in the last two years. things that are hard to see past. steve schwarzman gets a $450
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million payday. they year we have conversation. how do you see past that, how much more difficult doesn't make that case when you have things like that attracting attention? ironically, steve is entitled to that, by the way his partnership agreements work. and 20 agreement, which is the greatest thing since sliced bread. veryca is still aspirational. we want to live in a place where people like steve schwarzman, who is exceptional in what he does, can make $450 million a year. we would not want to live in a place where the exception people cannot make that kind of money. that is probably a good thing, right? but that does not mean that wall street should not have seatbelts, should not have speed limits. wall street should not be allowed to take the whiskey bottle and drive on the wrong side of the road in the ferrari.
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which i think if you take off the rules and regulations, which is what trump is talking about, without correspondingly demanding that wall street do something about its compensation system, which i have talked about for years, and again in this book. it is a key component of why wall street keeps getting itself into trouble. the incentive system is all wrong. people should be able to make a lot of money, people like steve schwarzman should be able to make as much money as there can, but there needs to be a corresponding accountability for their behavior if things go wrong. david: what would you say to somebody who has been watching what has been happening in washington, rule writing, regulations, why do in that process work, why didn't that sort through what regulations were good and bad? that theory personally is the justice department failed to prosecute the wrongdoings on wall street, which they should have done, which has happened in other crises, for 100-plus years. that created a vacuum, a void
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that politicians and regulators decided they should fill to punish wall street. by punishing wall street, the way they do business, by throwing stand into the gears of that engine, you are hurting the american people. as larry summers has said many times talking about secular stagnation, condemning us to 2% gdp growth, when you throw that --h sand into the gears, dodd-frank was 850 pages long, initially 2300 pages long. the regulations are another 20,000 pages. there is one person on wall street whose job it is to watch but the others do all day. that is not good. the one good thing i can say about trump is he actually may do something about that. that doesn't mean take up all the regulations. don't get out the whiskey bottle and drive the ferrari on the wrong side of the road. let's has speed limits, seatbelts, let's do it right. david: we talk about making the
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system safe, perhaps not too safe. talk about fiduciary rules, rolling that vick. when you look at easy targets, what are some other things that back?be rolled do you see the federal reserve taking on a lesser role? >> another person just announced his resignation. he definitely had as his mantra, i'm not going to let wall street again have another financial crisis, exacerbate another crisis. i can understand the thinking behind that, but you need to have a risk reward ratio. you need people to be rewarded for taking prudent risk, having some accountability. there are some things about the , the law, rule federal reserve rules, capital requirements, that is a good thing. get my mind around the consumer protection financial bureau basically being a good thing, as long as the
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oversight of it is not under the fed but congress. there are things that we should keep. this is a moment to take out a scalpel, not a sledgehammer. it is the moment to also demand that wall street fix its compensation system, since doj went public in 1970, has been an unruly mess, has gotten us into one financial mess after another. the question is, will it be seized, or will it slip away again? david: wall street has to make the case to the american people for its relevance and importance. it also needs to make the case to people in washington, d.c. how do you bridge that gap with only a couple hundred miles here? >> i think my book gives them a blueprint. here, donald. here, gary. since you got to the make the argument yourself, or are afraid to make it yourself, which i understand, here is an argument for what it is important. it is so important.
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when you make wall street the villain, when you gross sand into the gears of the beautiful machine, you are affecting jobs and compensation across america. if this, in fact, will be the moment where these regulations are rolled back in the which is probably a good thing, let's also have some accountability to go with it. if you are afraid to make that argument, hand over my book to donald trump. david: we appreciate it. author of "why wall street matters." you can watch the speech tonight starting at 9:00 new york time. coming up, we hear from ohio senator rob portman. what he would like to hear from donald trump. this is bloomberg. ♪
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david: this is "bloomberg markets." days focusing100 on policy and politics in the first 100 days. let's get a check on the markets with julie hyman. julie: i want to take a look at inflation, what we are seeing happen in today's market. let's take a look at personal consumption expenditures, the fed's preferred inflation gauge. that is the white line, still below the 2% target for the fed. this is the core level of the pce. then we have the 10-year breakeven which looks at market expectations for inflation. that is ticking close to 2% now. what is happening on the ground anecdotally? there are a trio of groups that are seeing price competition that we have been focusing on today. first, we have the telecoms. a number of them have announced
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unlimited data wireless plans, we are seeing them down today, not as much as they have been. frontier is taking a hit. the verizon cfo today saying they are seeing a decline in user demand and have been introducing more of these unlimited data plans and cutting prices for them as a way to get more users back in. pressure on the telecoms here. pressure within retails after we got those numbers from target. taket says that they will some plays from walmart and cut prices. many of the other discounters down as well. if we are going to see more price squeezing, more low-price competition. charles schwab is cutting it standard online equity etf and etf trade commission from six dollars 95 dollars to $4.95. they already cut their commissions back on february 2.
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schwab, td ameritrade, and e*trade are all lower as well. a confluence of events that we have these different industries, and where we are not seeing inflation. it seems to be quite the opposite. david: thank you for that market update. congress is gearing up for president trump's first address to a joint session of congress this evening. kevin cirilli spoke with republican rob portman, republican of ohio, about what he expects to hear tonight. >> i think is a great opportunity for the president to talk about ways to bring the country together. policy issues were most agree, reform,ucture, policy tax reform, also helping the most notable among us, particularly this epidemic of heroin, pet nala. it is affecting my state and the entire country. i hope they will talk about those issues and stay on why it's important to make these reforms, improve people's lives.
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overseas, we have a real challenge. why it's important to have a strong military and whiny -- we need to restore america's role in the role for more peace and stability. i speak of the aids with on capitol hill are pushing for more specific details from the administration. let's talk about the border tax which divided the republican party. where do you stand on the issue, where do you think should, the border tax, will he get more details from president trump tonight? would get know if we more details. i hope on tax reform he talks about why. a lot of people are confused about why tax reform is so important. to me, it's a huge opportunity to increase wages and improve the economy. >> are you for or against the border tax? >> i am for tax reform. we have $200 million locked up overseas. we have the highest rate among the industrialized countries. we have a huge archive -- opportunity to give the economy a shot in the arm. we can simple five does tax rate
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and still have rates come down and have more revenue growth. i am not trying to throw cold water on any proposal right now. i just think we need to get the process moving but it's plain the american people why we can do better. we can stop losing businesses overseas and investment and jobs overseas, which is happening. these other kinds of issues where i think we should be able to find a bipartisan consensus. i hope the president talks about that. >> another issue is how to repeal parts of the affordable care act. i'm curious, there'll several plans floating around in the congress from the likes of rand paul, who has a more conservative plan, as well as a more moderate approach from senator susan collins. what do you think should be done with obamacare? >> again, let's it's plain why it is not working, so people can understand why it is necessary to change. i think part of the affordable care act, including allowing
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people with pre-existing conditions to still get coverage, are really important. that is a consensus. let people know that this is not about taking away the parts of the plan that are working, but a lot of the parts are not working, skyrocketing premiums, the doctor bulls, co-pays. my view is let's have a replacement in place. early on in this process, i was one of the republicans pushing back on moving too quickly because we did not have a replacement in place. quickly, you talk a lot about wanting to hear about bipartisan efforts. you talked about ways to combat drug trafficking. what about vocational schools to my vocational education, is that another area? we have heard a little bit of this from vice president mike rentz. -- mike pence. could we hear from this tonight? >> absolutely. i started a caucus here focusing on what was once called vocational education, now called cte. it is cutting edge.
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i'm so excited about what is happening around ohio. around the country we can do better in terms of getting more people to take that route, get the skills training. they can get a job when they get out, get college credit in high school. more importantly for ohio, we have the skills gap. we have a lot of jobs that are being advertised, about 120,000 jobs probably this morning on our website, and yet you have 250,000 people out of work. the difference when you look at the jobs is the skills gap. for providing the skills, we will create more jobs in the country and keep more businesses in the country. -- ohiohat was a higher republican senator rob portman. you sure to catch president trump's address to a joint session of congress tonight at 9:00 p.m. washington time. this is bloomberg. ♪
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david: this is "bloomberg markets." i'm david gura. as we push ahead to president trump's highly anticipated speak before a joint session of congress tonight. our congressional reporter stephen dennis is with us from capitol hill. we saw a headline a few minutes ago that donald trump in his budget is set to eye a 37% cut to diplomacy and foreign aid. ont has been the reaction capitol hill about what we have learned thus far about the budget proposal? >> basically what you can expect, what we have heard from democrats is it is dead on arrival. we have heard that from some republicans as well. lindsey graham, who is in charge of the state department's budget in the senate also said that. the bob corker just told me outside that he sees this as sort of the beginning of the process.
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he sees diplomacy as very important. he points to the fact that a lot of generals, like so-called soft power. if you have a country that is doing well economically, we can handle things that automatically, then you don't need to send in troops. david: we talked about what investors hope to hear tonight, the details they are looking for. as you talk to others, what are they saying about the substance they are looking for tonight? >> i think they want more details. trump has gone around the country for a couple of years saying his plan on health care would be great and cheaper and cover everybody. people want to hear more specifics. there are a lot of competing pans -- plans on the hill. maybe he can put more meat on the bone as to what that will look like. also a big fight among republicans on taxes, whether there will be this border adjustable tax. trump white house has been split on this. stephen miller, stephen
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bannon-wing is on the same team as speaker paul ryan on this board are adjustable tax. a lot of republicans do not like that, including in the white house. maybe trump can settle the question tonight, or not. another thing to watch, his reception among democrats. a number of them have called him a racist, other strong language. it will be interesting to see if they can sit on their hands and not scream and act out. david: back to the border adjustment tax, the ceo of gm maryborough was speaking across town. this is what she had to say about how she thinks her industry would be affected by attacks like that. -- a tax like that. tax, iforder adjustment not done very thoughtfully, could be problematic. sellnerally build where we , but in this region, there is a pretty integrated supply base
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between mexico and canada and the united states. i was talking with our colleague about how this is playing out on the house side. you mentioned the relationship between paul ryan and steve bannon in the white house. what are senators saying about this particular facet of the plan? a i spoke to senator cornyn little over a week ago. he says there are simply not enough to vote on the senate side to pass it. he says they should go with a more conventional tax reform where you get rid of loopholes and lower the rate as opposed to a completely new system. but trump has not really weighed in yet. he has been on sort of both sides of the issue. we will see when he actually gets behind one plan or not, whether senators fall in line. there are a number of other
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senators you say they will not support that, people like david purdue of georgia [no audio] you can watch that in full here on bloomberg television. we will also care that for you on bloomberg radio. special coverage begins at 9:00 in new york tonight, 1:00 hour. grover norquist joins us to talk about tax reform and his address to congress tonight. you can also watch the address and all of our interviews on the bloomberg. "bloomberg markets" coming up. this is bloomberg. ♪ . .
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scarlet: it's 2 p.m. in new york, 11 in san francisco. i'm scarlet fu. and i'm oliver renick. welcome to bloomberg markets.
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scarlet: from bloomberg world headquarters in new york, we are going to take you from washington to minneapolis, moscow and soul in the next hour. stocks in a holding pattern ahead of president trump's address to congress. what does wall street need to hear to keep the rally going? the odds of a rate hike in march are rising -- markets are pricing in a 50% chance of an increase. we examine what is driving that higher. plunging, theet store announcing a new strategy that will probably lower profit margins as it attempts to compete with walmart and amazon. u.s. markets close in about two hours. julie hyman is tracking the moves and the moves are not very large right now as we await the big speech. investors are
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awaiting details about president trump's land for the economy and tax cuts. we are seeing all three major averages down, but just slightly. the nasdaq doing the worst of the three today. the dow was floating -- was flirting with positive numbers earlier. but the incremental movements have been very, very small for quite some time. the 55th session of the s&p where it has not moved 1% of the close up or down. the dow is up on a net range, and we are seeing it at record lows as it has been tighter and tighter even on the days when the dow has continued to make records, the movements have been very small. the dow is off the lows of the session. the pullback we have seen, you see bottoming out around 1230 and coming up to be little
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changed as we head into the afternoon. if you look at the best performers over the past month or so, you see apple, as we have seen apple climbing, warren buffett revealing he's taking a larger stake in the company. cisco systems doing well and talkng benefiting from the about increased military spending and discussions between its ceo and president trump. those numbers 10%. all eyes will be on capitol hill tonight as president trump repairs to give his first primetime speech to a joint session of hungers. the president is under increasing pressure to answer questions about how he's going to deliver on all those promises. for more on what global investors want to hear, let's bring in mike mckee, our international and politics correspondent for bloomberg news. there's a lot at stake as markets have kept going higher.
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what's going to be the most paramount concern today? the -- whether he can come up with some sort of plan people can get their hands around, some sort of specificity for both obamacare and tax reform, to move this forward. the white house and capitol hill saying we are going to overturn obamacare, repeal it and replace it. none of that has happened and republicans are stuck. people are looking to the podium to see if he has a plan to move that along. tax reform, he has talked about a great tax reform program but he has not laid out a tax reform program. so where does he come down on all of that? scarlet: the difference between him and house republicans is notable. i want to bring in something mary barra said today.
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mary: for our industry, the border adjusted tax, if not done very thoughtfully could be problematic because we generally build where we sell, but in this region, there's a pretty integrated supply base between mexico, canada and the united states. scarlet: remind us where donald trump stands on the import tax throughoutpicer their at 30%. mike: like many issues were donald trump, he's on both sides of it. he said at one point he doesn't like it and has said he doesn't know. said he would support border taxes to keep border does heom moving, but support a border tax or not, that would be one thing wall street would really like to know. oliver: one of the most read stories on the terminal today
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was about house speaker paul ryan finding an ally in steve bannon on a border tax. i guess we will see where the middle ground is. let's talk about this timeline. it seems like everything is hinging on the repeal or oflacement or both thereof obamacare. it looks like trump is saying before we do the budget, we have to do complicated. this a lot of people knew would be complicated. if this comes down to legislating, and that's very different than going on the campaign trail and waving her arms and saying i want to do this or that. what the republicans have done is attached obamacare to the 2017 budget resolution because it enables them to use a process called reconciliation that will enable them to vote on obamacare with no filibuster in the senate. republicane 52 votes, so they need to avoid a filibuster if they want to get through. so they can move on to tax reform until next year's budget
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resolution, so they have to get through this one first. that means not just through obamacare stuff has to be done but they have to do with the spending priorities the president wants a four they can move on to tax reform. they're hoping to get to this by sometime in the summer, but a lot of people say that is ambitious because they have the debt ceiling and the continuing resolution that funds the government, plus the confirmation of a supreme court justice. an ambitious timeline and people will be looking to see if the president can clarify how this is moving forward. scarlet: i'm glad you make the legislatingetween and campaigning. how much will the president be speaking as if he is campaigning legislating? mike: that's one thing you want to pay attention to. does he do something like recent days at the cpac conference where he plays to the base, lots of red meat, lots of i'm going to do great things and insults the press and insults the
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democrats, or is he going to reach out and actually talk to the people in the chamber whom he needs to get things done. that's an important distinction and he hasn't done that yet. it will be interesting to see if he doesn't tonight. it's not technically the state of the union, but it is kind of like that. .t's a joint session do we have any kind of precedent to know what to expect? how usually do we hear per size details on tax reform or the budget for all this type of stuff that is going to be in the spotlight? mike: donald trump is a little bit behind. one of the reasons as he doesn't have his staff and he proposed so many things without details that they are having trouble flushing it out. the first speech of a president's term is not usually called the state of the union. there's no reason why it's not called a state of the union, but it is not. 2009, barack obama came to congress and said here are my
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priorities on the economy. he asked for a package to be ready which he brought to capitol hill because they had to address the economic crisis. in 2001, george w. bush did not have the same kind of legislative package ready to go, but he talked in general terms about what he wanted to do. go back to 1993, bill clinton did have an economic package ready to go because he had an economic recession we were coming out of. scarlet: michael mckee, thank you very much. a reminder that you can watch president trump's speech tonight in full on bloomberg television. our coverage begins at 9:00 new york time. oliver: let's check on the first word news with mark crumpton in the newsroom. mark: house speaker paul ryan says it does not concern him president trump does not offer to fill hisd plans campaign promises because "i see him as more of a chairman." ryan made the remark during the
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nbc today show this morning. the speaker said we need more answers when it comes to russia. mr. ryan: we think we need to do an investigation here with our intelligence communities. there's one thing that is unique -- this gets into the methods and sources that is very sensitive. it's the most sensitive tool in our national security toolbox. that's why we have an intelligence committee of men and women in congress who have gone through the process of understanding those tools. need speaker ryan says we to make sure "nothing happens that should not have happened. dan coats will be caught in a fight ahead of his confirmation hearing today. president trump nominated him to serve as director of national intelligence. he will face tough questions from his former senate colleagues because some of the intelligence agencies he will oversee are involved in investigations touching on the president and russia. news is good news and bad for american taxpayers when it
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comes to the internal revenue service. the agency is conducting fewer audits because of years of budget cuts. as of now, the irs is focusing on those who are wealthy or have complicated tax situations and agents are trying to squeeze more money out of each audit. china may offer financial rewards to encourage couples to have second children. that would represent a fundamental shift in the communist party's approach to family wedding. in 2015, china scrapped the one child policy that had been in place for decades. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. scarlet? scarlet: coming up, we are tracking the trump trade ahead of the speech tonight. we will speak with a top fundraiser from j.p. morgan asset management that. this is bloomberg. ♪
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scarlet: this is bloomberg markets. i'm scarlet fu. oliver: and i'm oliver renick. let's talk about markets -- 14% is how much the dow jones has rallied since donald trump made this promise earlier in the month. mr. trump: lowering the american tax burden is big-league. it was the announcement of something i would say over the next two or three weeks that i would say would be phenomenal in terms of tax. now that the stage has been set for the big speech tonight, will he deliver and what will he deliver? fromng us is anne lester j.p. morgan asset management.
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tonight, the big news piece here , things have been quiet the last 48 hours. what's important to investors right now? anne: investors always want to feel like there is some pretty stability in the world and for the last couple of months, there's been a lot of optimism amount -- around potential deregulation, a potential fiscal stimulus taking the point of monetary stimulus and a hope we will see this recovery coming to a sustaining place and interest rates normalize. as an investor, those are things we want to start seeing how that is actually going to happen. when i look at this as an investor and i worked on the hill for four years, so there's a little insight there. it is going to be how does that agenda translate into legislation. one thing we talk about a fair amount is how does that happen and how long does it take?
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given our fundamental belief the economy is strong and growing in a broader global, globally positive environment, what pickups might occur as this process unfolds that may present opportunities as investors. scarlet: the level of demand is probably unrealistic. what do you think would be the surprise -- that we get no details are we get actual details? to ask thating question right back to you because i'm going to ask what will be a surprise? i think we have learned to expect the unexpected and to me, the most important thing to try to understand is the pace and specifics.f lots of details would be surprising but maybe specifics would be what is most helpful to hear. asset: let's talk about
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classes. when you look at the equity market, the dow jones up 14%, 10 year yield have jumped, and now it's gone back a little bit. look at the u.s. dollar versus the yen and the yen has strengthened. ripe for somest kind of adjustment if there is a big piece of news? ate: i think when we look the big picture, we see a strong u.s. economy, a strengthening global economy. for us, we don't see any warning signs of a recession on the horizon, so let's call it at least 18 months away or more. that makes us confident investors. not just in the u.s. but in credit markets. that said, you have to look at valuations. we think the market has gone a very long way based on some combination of specific optimism around some's best -- some specific things the market is
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looking for and maybe some animal spirits. stocks in specific. , thatxed income market backup in rates is anticipating a aggressive series of moves by the fed that when you stop and look at the data, yes, the economy is strengthening. pace ispering of the what is important and the speed is a big factor where the markets are willing to sustain certain levels. let's call it those bumps in the market has they may find places to take risk. scarlet: you are long both credit and equity risk assets. where are you looking if we get a bout of volatility in prices go down and you can jump in their? , we areoadly speaking
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not looking to add a lot more risk. i to get going to be some non-us equity markets where we have started buying and look for those opportunities. we have a great asset allocation right now but it is hard to answer. it depends how it happens and when it happens and the gap between our forecast and what the market is pricing. about the fedtalk real quick. we are shifting to an environment where investors will be used to a fiscal stimulus rather than a monetary one. but there are eyes on janet yellen. does the fed still have the power to keep a range on markets , to keep the yellen put? anne: i think there is the don't fight the fed thing. when the fed starts rapidly accelerating what they are doing in the marketplace, we might see some shifts.
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we don't see that super rapid acceleration as far as being measured incommensurate with the pace of activity. oliver: so anne: yellen is important to markets? the fed is always important. oliver: good stuff. thank you so much. scarlet: a programming note -- you will want to catch our new yield., bloomberg real he will be hosting the biggest names in the field as a provider analysis on global markets. oliver: still ahead, target tumbles. the retailer shares tumbled after it announced plans to cut prices an attempt to lower more shoppers. down 10% in the last two days. this is bloomberg. ♪
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oliver: this is bloomberg markets. i'm oliver renick. scarlet: and i'm scarlet fu. shares of target declining today after forecasts were lower than analysts expected. they are trying to lure customers back in their stores. joins us fromlyst our bureau in princeton, new jersey. focusing on price would mean target is taking on amazon and walmart. has anyone done that in retail and come out ahead? guest: no, they haven't. you think of price and you think of walmart and amazon. target's move to go after the price business seems to not really be what they need to do to drive traffic. they need to add categories and repeat trips. i would have expected them to talk more about food or something else that would draw more visits to the store because as a target shopper and red card
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member who shops target, they are there because they like the quality and they likely target has to offer. they are not necessarily there because the price. scarlet: by focusing on the price, they put themselves at risk. if you come inside the bloomberg, you will see target in blue and walmart in right. -- in light. you can see when they said they would focus on price, investors punished the stock. oliver: a similar ticks down but much bigger in target. so far, this year walmart is getting a boost in share price. can you shed some light on the competitive situation between the two? it seems like target's strategy shifting them a graphic may not be holding up the way they hoped. reason walmart has
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been driving is due to its mix and the acquisition which has given them a better entry into the marketplace. target has a more affluent customer than walmart. while they care about value, they are not trying to get the two cents below walmart to make that trip into the store. going after that customers what they are doing and i'm not sure if that's the right strategy to win back market share or even grow market share from here. of activistt kind investors have taken an interest in target? have they or will they soon? poonam: that's hard to tell. from analyst meeting, it sounded like it was unclear if price was the right way to move forward. there were a lot of questions that were asked -- why price? why are we still focused on price? are there other ways to drive traffic back to the store
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question mark that really was not answered. oliver: if investors don't like this strategy, what did they do? let's rethink this or are they going to stick to the guns and re-molded in a way that people could get on board with? poonam: in the near term, we know it is -- we know there is pressure. even with their supply chain efforts, for the near term, you saw in their earnings guidance that there are potentially weaker results coming if the strategy does not pay off to drive more repeat trips. scarlet: what is target doing correctly? if moving to a price strategy raises concerns, what are they doing well? poonam: the digital aspect is doing well. they noted digital is 14% of growth and is growing double-digit. they are using their stores as distribution centers and focused on speed. all of those are great moves to
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support e-commerce platform and men -- and for film it from their stores. the challenge is how do you support the 80% of business reliant on the stores and getting more frequent trips? will find outs we what the solution is as investors continue to sell off the stock today. thank you for joining us. still ahead, we have the commodities close. a reported deal between the change to biofuel standards makes its way to president trump's desk as he continues to explore executive orders on the energy space. we'll check on the reaction of oil and more, next. this is bloomberg. ♪
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oliver: we are having a little trouble with scarlet's microphone.
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commodity markets are closing in new york. but look at some of today's movers as we go through the trump effect. we're looking at corn futures -- a little bit of green today. they have spiked but they are off their highs. a deal for the trump administration to review the standard. they are pushing to expand the sale of ethanol in the u.s. and a presidential memorandum could be issued soon according to people family with the matter. crude oil trading lower for most of the day. a report opec may have actually boosted production this month contrary to what we expected with oil cuts, helping to send the commodity lower. let's check out this next chart. it shows traders think there's more room to run for copper and oil prices. commodities surged to record highs, but there is caution,
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noting that comes to crude oil, the math does not add up. given the tight trading range and abundant u.s. supply. let's stick with commodities because we are going to talk about hedge fund managers. they have been telling bloomberg hedge funds remain a big part of their strategy even though they have cashed in. commodities are not the hottest areas right now but what are hedge funds doing in the space? guest: we talked to some of the best performers in 2016. a lot of them were distressed at hedge funds and many of them had big bets in 2016 and were able to form well because of those back. .hey still like energy we talked to several managers and contrarian capital. to see a good opportunity in the equity of those restructured companies that are now having better balanced sheets -- better
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balance sheet than cancer drilling. even if oil stays where it is, it should perform well. from energyunities companies that may be lagged the big rally for stock pickers, that could be a good opportunity. seemed like last year everything related to energy rose in tandem. there was a play on the sector and you could leave it alone. there seems to be more focus on choosing winners and losers, looking for specific companies that might have gotten left behind. katia: and not just in the energy sector. there's a lot of opportunity for stock pickers with new policies as they come to bear. a lot of folks say this could be the return of the stock ticker. with everything soaring at the same time, they have not had their moment to shine. this could be their moment. health care, not just energy,
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industrials, tech companies, which ones are going to be hurt and which ones will be benefiting from an import tax? oliver: what about the timing on the energy space as it pertains to oil? bottom thatructural has been put in place -- not necessarily that there's a bottom in oil but you have opec cuts and it seems like countries are going to be abiding by those rules. you've got some sort of consolidation happening in energy with a lot of people who got hurt in the downturn. go anywhere and doesn't have a big move up, is it the place to go? katia: that is what we were talking about with some of the folks we talked to. last year, oil from start to finish was a thing. the question is who are the players that can benefit from putting themselves to work,
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drilling at these prices. cuts in are production the rest of the world, u.s. shale producers don't have them. that's who will be benefiting now. any sense ife have they view it as a cyclical investment or are they on their own? one and notlked to havether, to funds that totally different bets on the they are both long short equity funds. world takinge the off with commodity-related, with china's one belt, one road infrastructure spending in the u.s. this could be a way for them to you have carlson capital who sees a doomsday outlook.
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if there's a border adjustment tax on protectionist policy in the u.s., how that translates into a stronger dollar and cripple borrowers. and a devaluation in china -- all of this leads to know demand for those commodity related equities. it's interesting, depending on where your views are for trump's policies, you could see different ways this plays out. so much.thank you that story can be found on what's get a check of the headlines with bloomberg first word news. push toesident trump's increase spending is starting with a $30 billion amendment to this year's budget that would bring funding to war supplies and the boeing super hornet jet. the amendment the pentagon may submit to the white house office of management and budget would set the stage for a $54 billion
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increase that administration officials announced yesterday for the budget year that begins in october. the boost would be offset by cuts from the rest of the government's discretionary budget. the president has a new commerce secretary -- vice president pence administered the oath of office to wilbur ross a day after the senate voted 72-27 to confirm them. ross has said the administration will work quickly to renegotiate nafta with canada and mexico. ross is worth an estimated $2.9 billion and has extensive business ties around the world. the top official of a region and southwestern france says a police sniper accidentally fired his weapon during a speech by the friends -- the french president. two people were wounded. the incident occurred while the president was inaugurating a new fast train line in a town west of france.
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putinn president vladimir says moscow will not support new syrianns against president bashar al-assad. president putin made the remarks following a state visit to jirga stand -- he said any new sanctions on syria, in his words , would undermine trust in the negotiating process. global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. i'm mark crumpton. this is bloomberg. scarlet: coming up, we got today's walk the talk. we will speak with the global head of research economic structure at wells fargo. she will give us information on the gender pay gap. this is bloomberg. ♪
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. . this is scarlet: bloomberg markets. i'm oliver renick. i'm scarlet fu. let's head to abigail doolittle. abigail: we are looking at the utility etf sector today, the best for the s&p 500. utility etf ate session highs. centerpoint is hitting levels last seen in 2001, so some strength here. dominion resources along with southern company. as for what is behind the utilities, look at the 10 year yield and it is trading lower. haven bonds are rallying, but the reason this sends utilities higher, when yields fall, higher yields look more attractive to
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investors. speaking of yields, one question with lots of talk about the fed march meeting being live that they could raise rates there. we have a chart that said just perhaps that could happen but the likelihood is the fed will be on hold. is the 10 year yield over the last six months. sideways stall and have looked at a variety of patterns and ways -- it's a coil . the coil is tightening and that tells us resolution is likely soon. what mike this bearish for yields the fact that yield is dropping below the range and below the 50 day moving average. it suggests the 10 year yield could retrace much of that move up, so it could be bearish for yields. oliver: time now for the
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bloomberg business flash -- a look at some of the biggest business stories in the news today. looking to push back on obama administration policies. >> the marketplace in the united states is extremely competitive. itsr the fcc started investigation of free data offering, all four of the carriers in the united states moved up the data plan at the good thing for consumers. tover: the rules were moved protect consumer information. wireless companies teams them unfair because they did not truly impact internet countries. they are also taking steps to dismantle net neutrality. snap is expected to price the ipo one or two dollars above the market range according to people familiar with the process. shares will be priced tomorrow after the market closed -- after the market close.
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they were originally looking for evaluation of $22 billion. shares -- the liberty ceo evaluationthat the did not make sense and the deal would only be interesting at the right price according to people familiar with the matter. to expressed pandora renewed interest in a takeover. they offered $15 a share to acquire pandora. that is your bloomberg business flash of date. in today's walk the talk, where we focus on social changes that have outpaced corporate america's ability to adapt, we take a fresh look at the gender pay gap. diane schumaker-krieg joins us. her group recently published a report on the topic.
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she joins me now with some of the highlights. good to see you. women have clearly made huge gains when it comes to hearing the pay gap. we now make $.80 on every dollar versus six the sense in the 1980's. we've seen congress stall in the last 15 years. why is that? society has been we are recognize that if going to improve things for women, we also have to change the way we look at men. women cannot do it on their own. they need supportive husbands who can contribute to the childcare. corporate america has not made it easy for men to leave at 4:00 in the afternoon and help their spouses. one study i thought was very fromesting, and article
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the new york times called "working mothers, stay-at-home threeand she featured very senior women in our research department. wasbottom line of the story the reason these women were able to be so successful was because they had supportive husband. scarlet: behind every woman is a great man. you write about how women are the single source of labor in a household. and here, we're talking about a two income household. talk about the dynamic for women as opposed to men. i thought this was a great part of the report. diane: it is just that women, because they are the swing factor, they need to have a value proposition that is compelling. the problem for many women today is the cost of childcare has
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grown twice as fast as median household income. they need to be able to clear that bar and that is why this report is so important. we need to narrow pay equities so women can comfortably clear the bar because if they can't, they will continue to stay on the sidelines. scarlet: the way you put it in the report as they can wait for the pull rather than be pushed by financial meters. in terms of the pay gap, if you look at education levels, female in college surpassed men. is education no longer a factor? diane: one way to look at is if women were not over achieving educationally, then the gender pay gap would be 6% higher. scarlet: that is pretty stunning.
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in your report was to look at the pay gap in every occupation. earn more inmen all every occupation, including female dominated fields. is there any reason why that is? diane: we have not figured it out. i think some of it has to do with discrimination. i think some of the factors are also unconscious bias. scarlet: always the unconscious bias that comes back. speaking of consciousness, how conscious are companies of the gender pay gap? if they come up with new ways of closing it? have you see any greater effort in that? think what america is very focused on diversity and inclusion and pay equity as part of that equation. i thought it was very
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interesting that nine -- shareholders of nine technology companies approached these companies and said we want you to focus on gender pay equity in closing the gap. several of those companies have publicly said they were committed to doing that. apple, intel and amazon all say that they are near 100% pay equity. can hold and should hold companies accountable. scarlet: that is from the outside, but what about women ourselves westmark what could we be doing to improve the situation for ourselves? diane: i think women sometimes opt out to quickly. go into various occupations thinking the's will afford them more flexibility.
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they are keeping themselves out of high-paying fields. women to would be for follow their passion. don't think so much about when you have children in the future and what consideration you would need for childcare. go with your profession and if you are great at what you do, you will find a way to make it work for you. what companies need to do is one, have better training, unconscious bias training is a good example. and have managers that are better trained. undue weightt an on putting long -- working long hours and working in flex lowers. you look at the workplace today, the highest paid people are those willing to work the
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longest, most inflexible hours. ,carlet: diane schumaker-krieg thank you so much. oliver: coming up, will the fed more like a lion in march question the ides of march -- march 15. that's when the fed will announce whether it's going to hike. we will talk about that next. this is bloomberg. ♪
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oliver: this is bloomberg markets. i'm oliver renick. scarlet: and i'm scarlet fu. onare keeping our eye jpmorgan stocks. jamie dimon is speaking. he has been speaking for 15 or 20 minutes, taking questions from analysts, talking the traditional bank reputation of jpmorgan and also talked about what is going on in
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washington, to some degree saying there needs to be more collaboration on tax reform. he says it's not about what is good for the bank or the company, it is about what is good for america. something the cfo said this morning in her comments, that some regulation works and some does not. he did say a lack of tax reform is hurting the average american and infrastructure spending would be positive. he had an exchange with the well-known bank analysts who just lost his job after that company closed its u.s. equities unit after he asked a question about jpmorgan's brand. he said you are a brand. he told the story about when he first became aware of him when he took over as ceo of bank one and said he wasn't allowed them call because he'd written the negative report about the company.
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a couple of the highlights the far. onrlet: love the antidote mike mayo from jamie dimon. you can follow all the headlines on tv . we were talking about hedge fund and we've got all the headlines and live streams and charts are interactive. you can click on it and that will take you to the chart we have highlighted. a fan of the closed captioning because i like to get those wrecked quotes from the bloomberg. direct quotes from the bloomberg. here with us is joe weisenthal, cohost of "what'd you miss?" was this in the cards all along? joe: supposedly, the fed would not have an inclined to go unless it could get market
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expectations a bit higher. but it seems like one of these self reinforcing things where of market expectations get high enough, the fed is inclined to go. nobody really has a very clean answer why there's been a big upward shift. people talk about the dallas fed president. he didn't say anything new. maybe some of the trump stuff bringing infrastructure spending. data has been good, so that could be it. scarlet: the data was good before yesterday afternoon. joe: a lot of people will be paying attention to janet yellen's speech on friday put marche wants to in play, fridays a good chance to do it. scarlet: how closely do you think people will be listening to different fed official speeches? is it going to be predicated on
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what president says regarding the timetable for spending? is it's liketion trump, yellen and then next friday's job report. i don't know what the order is. i want to say those three things and then a bunch of other stuff would be my gut in terms of what could move this. scarlet: joe weisenthal, thank you very much. we will get the latest on client investors and what they want to know when it comes to president trump's speech. from new york, this is bloomberg. ♪
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oliver: it is 3:00 p.m. in new york. scarlet: i am scarlet fu. welcome to bloomberg markets.
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oliver: we will take you from andtle to washington beijing in the next hour. here are the top stories around the world that we are watching. markets, one hour to go until the close of trading and stocks are taking a breather. the most on the line. ,pmorgan's holding investor day jamie dimon taking questions as we speak. he has commented on regulation and president trump's policy. we will bring you updates throughout the afternoon. plus, howard schultz details doing the right thing, paying taxes and hiring refugees for his business. there one hour away from close of trading. still in the red? abigail: the dell may be on pace .o break its record streak
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it could not manage to trade higher by the end of trading today, in about an hour, it .ould rake the streak if the dow does manage to trade declines across the board here for major averages. the dell earlier made an attempt to trade and finish higher. earlier in the day, a little bit of trading positive upside in the green. closer to the lows right now, it will be interesting to see what does happen. we have seen several closes in the last half-hour the average has managed to stay higher. 12 days in a row, in the month of february, the dow in a month of february, apple, cisco, and boeing. gaining on a very strong
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quarter, and boeing gaining as it refuted and -- as a perceived the professional relationship with trump. doing all that much, really treading water more so the neck is. we have the bloomberg dollar -- index up more than it had been earlier. down one basis point, telling us bonds are rallying a little bit, and gold has moved a little bit before it had been flat. is soaring a bit here. up about 7% on the month, much of this coming today, as you can see. it appears we have a little bit of uncertainty on the part of investors ahead of the policy and tax reform details that could come tonight. things are getting wild out there. thanks.
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>> jamie dimon is speaking right now and julie hyman has been tracking the headlines. julie: i want to bring you more comments on regulation. specifically, he said you could potentially see a small piece of regulation that could change the definition under the rule of rock trading. he said it is too broad a definition at this point, that it could be beneficial if it is narrow to some extent. as for what other types of regulations could change, he said he will see different people and regulatory positions. policy atrsonnel is least in some cases, they cannot do whatever they want, but we could see some change to regulation overtime. when he is participating in various advisory groups for president trump, he is doing that in the improving the u.s. economy and says the united states could be doing a lot policy and heoper also said it is not in our interest to see the banks fail.
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to pay for the failure of thanks. those are some of his comments on regulation. we await president trump's's comments tonight as well before congress. i will bring you more updates as we get them. quite thank you. we are just hours away from what julie had just told us. president trump's first address to congress. health care, financials, and retail might have the most on the line. let's take off -- pickup or julie left off. higher rates, deeper yield curves, hope for unraveling dodd-frank. investors clearly had been building up their ranks in these thoughts. >> it is one of the times when trump will be expected to say something to back up share gains. people want him to put his money where his mouth is.
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maybe it is coming for some of these so-called trump trade's financials are a perfect example. regulatory oversight, viewed as positive for profits for banks. the x factor, which is janet yellen. andpace of the rate hikes the tightening cycle is really driving a lot of the gains in banks here you have a double whammy, which is why they are one of the few areas we have not seen pullbacks since the election. it is straight up which is why it is leaving the market. underweight or overweight? what is the positioning like? >> according to bank of america merrill lynch, underweight. assuming we get some details that could be viewed as pro-bank, that could result in further share gains. theher you think evaluations are stretched or any of that, there is good evidence to show people are so
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underweight, there still could theseey to pull back into things. >> let's talk about banks and the expectation for rates. he said he still sees rate hikes. we have got yellen. we figure out whether or not some of these inflation sensitive sectors will move based on the fed or whether they will move based on trump or some other factor like earnings. >> it is a what have you done for me lately. going off of the last data point. tonight is trump. friday, the fed. people have plenty of time to set the table for that. people will look to see if he will mention dodd-frank. that will be the big thing in banks. also you have other things that could be mentioned, the border tax, kind of seen as off the table. he may be was not going to mention it. retail stocks were up 6% after the election.
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when the border tax kind of became a thing, today, we have an exclusive bloomberg -- they are forces and pro-border tax. maybe it is back on the table and that will be something people will be hanging on. we know the president will bring up is obamacare, the plan to replace it with something better. health care companies have been moving on this. they initially got a big burst because everyone thought they would be in position. is this a growth or defensive sector as -- headlines? >> depends. the affordable care act, hospitals hit with any headline on the spirit you look at drug prices and what he has been saying about that, it is a different ballgame. he is talking about the jug prices are so high, will he implement anything to lower them? movinghas really been hospitals and health care services separately from biotech.
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the health care sector of course contains all of these and it is whipsawed around depending on the strength of whatever the latest headline was for either of those. >> thanks. you can catch the president's live on bloomberg television. coverage begins at 9:00 p.m. new york time. a check, the get headlines. mark crumpton is in the newsroom. mark: staying on president trump, in just the last hour, he signed two bills and that helping women in science, math, and engineering professions. one requires nasa to submit a plan to support retired astronauts with outreach to female k-12 students. the second bill authorizes the national science foundation to support entrepreneurship by women scientists. after the bill's signing, the president also signed a directive compelling the u.s. army corps of engineers and the
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environmental protection agency rule.onsider the 2015 critics say the obama era rule gave the u.s. government too much power to regulate waterways nationwide. attorney general jeff sessions warns we are facing a dangerous new trend in crime which requires more support for law enforcement and tough measures against criminals. session maintains crime rates are moving up. heat knowledges they remain near historic lows across much of the country. the republican plan to replace the affordable care act. groupader of the largest of house conservatives says he cannot support the strategy. congressman mark walker says the energy obamacare plan appears to create a new expensive entitlement program. the british minister urged his cabinet calling's to earth -- the pair for the possibility with theld be no deal european union.
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david davis called that an unlikely possibility but he said it is important that government departments understand the challenges of negotiating an exit from the eu. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. this is bloomberg. oliver: thank you. at the take a look markets quickly. before that, we will go to a break. this is bloomberg. ♪
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scarlet: this is "bloomberg markets." dimon isceo jamie
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speaking out, taking questions from everything from strategy to regulation. principles, it is high time you look at it. no one in their rational mind could say we have a consistent rational -- we're not fanatics about it. we know there was a crisis. >> julie hyman is back with more headlines. julie: he did talk about regulation and wanting more rational regulation, wanting perhaps a tightening of the rule or a redefinition of it. he said you could expect potentially some piece of small .egislation to redefine that he talked also about tax reform and that would be good for america. in his comments, he was careful to say i am not concerned. he is concerned to some extent i'min terms of regulation, concerned with what is good for america. he said that is why he has
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participated in various advisory capacities to the president. he also said if wages rise, 5 million people could come back to the job market. he talked about how regulation -- overregulation has been an issue for small business formation. he said there are a lot of reasons people may not want to own 10 year treasuries. will someone get hurt, he says yes, but it will not be systemic. also following the event, the bloomberg wall street reporter joins us here now. let's talk about yesterday. now we have got them talking on a lot of different topics. what is the most important to you? sayserything jamie dimon about the consumer and the economy is what we want to hear on the bankside. he never says much about trading that we would not already know from whatever the company has put out there.
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they talk about modest gains that they are seeing so far this quarter in trading -- it was kind of interesting. more for reasons of, is this really them under signing themselves so they can be later when they reported in april? always the economy and whether it is -- what is a consumer doing these days and what can they sell the future? >> we talked earlier about how a lot of hedge funds love getting into commodities. it is of huge interest right now because a year ago, things were falling apart. a different story today. >> exactly. one of the most interesting things jamie dimon said is the consumers, the big winner on gas prices falling, conversely, all the big banks were speaking in big chunky reserves because they might have had some losses from these energy companies. today, the seat -- the cfo was saying, in the second half of the year, we were pretty good
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and might be able to release a big chomp of the -- a big chunk of those are very different. >> another headline just crossed, saying more banks need to merge. an interesting angle as he is asked about regulation and the outlook for the industry overall. does he tend to comment on this a lot? >> many talk about merging and wanting to win market share. it is a theme we have heard from smaller players or, to some extent, bigger players. they know they will not be allowed to buy a lot of the smaller banks. going through a lot of issues, talking about trade as well, had they commented explicitly or has he talked about how he views any of the new administration policies? is there anything we can put in context? >> he is part of trump's's roundtable and he is also doing
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a lot of things regulation wise. his views are important. he has not said one way or another, i love his policy or i don't. i think he said earlier, he thinks the future is bright but the u.s. could grow much faster if it has tax reform. he also said one of the reasons we are slow in our roast is really by our own devices. he talks about war and sequestration and potentially defaulting on debt, all that things. >> one thing julie mentioned as well was mike, who unfortunately lost his job, still it attending , the free agent. >> yes. that is how he referenced himself. right there, exactly. this shop closed is equities business for research in the u.s., and about 90 colleagues of
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his work let go yesterday. --he got a little vote of, confidence there. thank you for joining. you can catch it on bloomberg at live . defending the tax policy and sat down for an exclusive interview. she began by asking him about comments that say starbucks does not pay its fair share. anyithout criticizing person or municipality, sometimes a company as iconic as starbucks gets pulled into saying that the whole story is not really told. u.k., i year in the think it is emblematic of the commitment to do things the right way.
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i believe in transparency 100% and wants to everything we can to make sure there is trust in everything we do. >> does it impact your notomers, or do you do it matter what? time, never do anything else that would remotely be inconsistent with being ethical and doing the right thing. the decisiono about refugees and things of tot nature, it is important embrace your core purpose and reason for being in all aspects of your business. leadership and being a strong be -- leaderannot cannot be one it is consistent -- convenient. is harder when you have the wind at your face and leadership is defined many times when you
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have to make a tough just decision. starbucks ceo howard schultz speaking earlier. still ahead, the nasdaq 100 stock index is up more than 8% this year. this is bloomberg. ♪
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it is time now for options insight with abigail doolittle. abigail: thanks. joining me is kevin kelly, chief investment officer at recon capital. thank you for joining us. ony'll 13th, a lot of focus whether it can finish higher on the 13th day in a row. it may not happen. have focused on this are your clients? >> earnings season is almost over.
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to consumers -- if you go in the options market today, you see about two times the amount versus thethe traded spx, same thing in the ndx market, the nasdaq 100. you see a bunch of people actually speculating in the trading market for that. >> another thing in recent weeks is the lack of volatility. 7% intothe vix of about trump's's big speech. details on tax reform and such, what have you seen? >> you see a lot of volatility back post earnings season. you have got a lack of clarity policies. they are focused on health care in terms of taxes. to know theant three month implied volatility
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is still about 15.5 right now. looking to goonly to the average since 2012. is probably natural to revert to 15, 3 months. that is interesting. a lot of work our other guests have talked about, potential volatility, suggestions around >>t, what are your thoughts? everyone is worried about going away. one of the biggest trade appened in the big market was risk reversal. they took the proceeds and bought -- it cost him about one dollar and $.20 -- $1.20. go see people go in and they as we have gone into the normal market sections -- sector version. >> we have a great chart. to your point, the nasdaq now on
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paper, its ninth yearly annual finish higher in a row. what are your thoughts and what is your trade? >> it is a great index. apple is about 10%, up the last yearin and it lends credence to the index. if you are worried about the market or hesitant or you want to get a little longer, you could do a risk reversal. you sell the 50 to 50, collect then you buy and the 5400 call. it does not cost you anything. the great part is you continue your exposure and you only have to get longer down. >> thank you for joining us, kevin kelly. back to you, scarlet. breaking news here as we get more information, a march hike is getting close, serious
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consideration. nationwide, we reached full employment, williams delivering remarks, saying the hike is getting serious consideration. we talked about fat hike probability so we continue to watch those headlines and more. course, it is a good point to make right now because you wonder whether president trump will push for lower rates now that he is president. all right. still ahead, the latest strategies. this is bloomberg. ♪
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marks: it is time for first word news. president trump will discuss security and a lot more before a joint session of congress tonight. white house officials say the president is still working on
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the speech and they are not sure how specific he will be on policy goals. the president is expected to incorporate his recent talks with law enforcement onto -- into the address. you can watch that live on bloomberg tv at 9:00 p.m. new york time. russia and china today vetoed a russian backed resolution that would have imposed new u.n. sanctions on 21 syrian individuals, organizations, and companies allegedly involving chemical weapons attacks in the war-ravaged country. the security council resolution would have banned all countries from supplying government with helicopters, which investigators were determined -- have determined were used in attacks. and china made an outrageous and indefensible choice today, refusing to hold bush are allah side's regime accountable to the use of -- assad


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